Chapter 41: Restoring National Sovereignty with a Truly National Banking System

What did William Jennings Bryan suggest that won him the Democratic nomination in 1896? What semantic trick had been used to subvert the Constitution? How much of the money supply is created directly by the Federal Reserve? How is the rest created? What do most people think that banks do now?

When the Bank of England was nationalized in 1946, why did it not change very much? Why did James Robertson call this “a grossly unfair windfall to the banks?” What was Robertson’s proposal? What did critics of it claim? What did the Shadow Chancellor of the Exchequer warn? Would the British economy collapse? Why?

What was a similar solution proposed in the US called, and who developed it? What happened to this person? Who revived the idea and how did he envision it? What would the American Monetary Act, developed by Stephen Zarlenga and the American Monetary Institute, require for checking accounts? How would Patrick Carmack’s Monetary Reform Act go even farther?

Who was responsible for destroying Japan’s financial system and how? Do you think there’s more to that story? If bank loans totaled $6 trillion in 2007, what were mortgages alone in 2008 at the height of the housing bubble? Why would banks need to borrow 90% of this money under a 100% fractional reserve system? Could this be gotten around if counties simply inherited the assets?

Would this be better than selling the assets to bondholders as securitized debt obligations? If the cost of retirement and healthcare could be cut in half, would that be better than giving bondholders 2-3% on their money? Would lowering the cost of living be a more equitable solution than giving interest at all?

Ellen Brown suggests that the 300-year fractional reserve Ponzi scheme has reached its mathematical end point and the banks are already bankrupt. Do you agree? Who warned in 2007 of a meltdown of the financial system and what were his credentials? What is the Islamic model of banking? Could county banks become hubs of self-organized investment clubs who take their own risks but get help in writing contracts and doing credit checks?

Discussion question: are government bonds borrowing from the next generation to benefit the current one? In a non-inflationary economy, do they make sense? Should major projects be funded as they go?

How did the US Postal Savings System operate from 1911 to 1967? Why was it developed? What do you think of this arrangement, with the steady interest rate and cap on savings? How was it made obsolete? What do you think of banks getting the benefit of higher interest rates for lending but the government guaranteeing the loans?

Describe how it would work, according to Professor Guttman, explaining terms like the float and overnight sweep. Brown claims that credit cards are necessary. Should credit be an everyday method of managing finances in a functional economy, or only reserved for emergencies? Could a different system be devised for private lending at a reasonable rate with protections for borrower and lender?

How could existing bank branches be picked up by local governments? Why does the money supply expand if loans and repayments zero out? Describe the LETS system. Would the LETS system work on a national scale? Or would the banking system work better on a local scale?

To what did Benjamin Franklin attribute the success of the young colonies? What was it called and how did it work? How did Roger Langrick explain the impossible contract problem? What is his solution and how does Brown critique it?

Describe the wicked witch of the west and Glinda, the good witch of the south’s approach to economics. Is it clear that economics is the means of governance and not independent from it? What does this say about trying to control economics through politics in the US?

Now imagine Persephone, the populist witch of the Pacific. Instead of lending any money into existence she uses the existing debts to spend the money into existence so the people can phase out debt itself. Instead of a 10% interest, a 10% tax pays half for government services for everyone and half for targeted social services. Which would be better?

How does The Project for a New American Century view national defense? How does this relate to Iran’s stance on usury? How have Islamic banks gotten around the prohibition against usury? What’s the maximum they can increase the price by? If paid over 30 years, what interest rate does this compare to?

Who has interest-free savings and loan associations? What is the incentive to loan if there’s no benefit? What happens in a default – do lenders lose their savings? Why would a government prefer to give interest-free loans for private profit rather than retaining ownership of the business and issuing money to pay workers and management?

Ellen Brown suggests that eliminating interest charges would cut the cost of state and local infrastructure in half, therefore reducing taxes. Sustainable energy and affordable housing would be possible for everyone, and inflation might be eliminated. Do you see any flaws in her logic? How would this affect the circulation of money? What hazards does she mention?

What was Australia’s Commonwealth Bank? If the bank charges a fraction of a percent in order to fund a non-defensive war, does that save the people money or cost them? Would it be better to give local governments, like Alberta, Canada, the power to create money, rather than the national government creating it and loaning it to them with interest?

How does Betty Reid Mandell, author of Selling Uncle Sam, compare to the CEO of Enron in the Wizards of Money episode? What does Catherine Austin Fitts say about HUD? In your experience, do government agencies have restrictions on hiring and firing that make them less innovative and flexible, or more fair and competitive? Could the domination by one class or race be avoided by allowing any community the right to secede and control their own debt assets?